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The future of private lending

According to New Haven Mortgage president and CEO and Mortgage Summit panelist David Vyner, the outlook for private lending may depend on proposed refinancing rules and their potential effect on home prices.

David Vyner: Well moving forward with the private lenders as we start seeing the tightening of the credit market, money markets and the fallout of the US, there’s been a, obviously there has been a change to the institutional lending where they have tightened up and with your self employed stated income features and it appears that it’s looking to get a little tighter CMHC starting to look at what the institutions will do.

We are also hearing coming, which we will know soon on renewals, the banks, the institutions may have to re-underwrite that mortgage loan that’s coming up for maturity, for renewal rather and insofar as the borrowers, credit changing, history changing, job status that could result in a win-win perhaps or a lose-lose, it really depends which way we look at it. We may have a whole onslaught of mortgages that are not being renewed, coming into the marketplace that may not be able to be renewed and a whole lot of housing stock coming out which may invariably shrink prices or value will come down maybe, if not slightly may plummet and oversupply in the marketplace.

On the flip side, from a private lender, the privates could step in and re-fi the mortgage, help the institution and help the borrower. Now the question becomes, are we helping the borrower if the mortgage rate were to move from 3% to 8%. Now we have probably another issue in affordability, which could cause some adverse conditions in the marketplace. But going forward I believe there is still opportunity and there will always be opportunity for private lenders as the ship goes and the brokers that are dealing with private funds will keep going with the private funds and the brokers who do not have experience will gain experience and start move to the private lenders as well, so I believe.